Can I direct my required minimum distribution directly to charity?  Can I expense the equipment that I’ve purchased for my small business in 2015?  Is my business eligible to claim research and development tax credits?  These seem like easy questions to answer, but sometimes yes or no isn’t as simple as it sounds.  There are over 50 items, many deductions and credits, that are now referred to as “tax extenders” and that expired as of December 31, 2014.  These tax extenders have been agenda items year after year, and we’ve found ourselves watching the calendar as December 31 draws closer each year without answers as to whether or not the laws will be reinstated.  As recently as last year, these extenders were written into law on December 19th.  That allowed for less than two weeks to incorporate into a tax plan!

Among the individual tax extenders on hold are the following:

  • $250 deduction for teacher classroom expenses
  • Deduction for mortgage insurance premiums paid
  • Tuition and Fees deduction
  • Tax-free distributions from IRAs for individuals age 70 ½ or older, up to $100,000
  • Deduction for state and local sales taxes
  • Discharge of mortgage debt on principal residence excluded form income

Popular business tax extenders also include the following:

  • Research and development credit
  • Enhanced Section 179 limit for immediately expensing capital purchases
  • Work opportunity tax credit
  • Bonus depreciation
  • 15-year write-off for qualified leasehold improvements
  • Exclusion of 100% of gain on certain small business stock

If these are items that you commonly take advantage of, whether as an individual or as a business taxpayer, it certainly poses a challenge when planning for taxes.  Feel free to reach out to one of the professionals at DeMott & Smith to discuss the impact of the extenders and how we can help prepare a tax plan for all circumstances.